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Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
.jpg) COALspot.com - This is a special interview about Indonesian proposed coal export ban by 2014, with Mr. Dipesh Dipu, Director of Deloitte Touche Tohmatsu, India.
The Indonesian government is currently in the process of drafting a new regulation that could ban the export of low-grade coal by January 12, 2014. This is likely to apply to coal below 5700 kcal/kg on air dried basis in value.
As of now Indonesia is producing around 150 million tons of coal with calorific value below 5700 GAD (according to chairman of Indonesian coal mining association). However by 2014, there are possibilities the total production of below 5700 GAD coal may reach more than 200 million per annum.
Will Indonesian coal export ban impact on the Indian fuel requirements?
The earlier grade of coal that was being considered for proposed ban has GCV of 5100 kcal/kg of less (adb), which can be comparable to 3800-4200 kcal/kg (arb) domestic coal available in India. This grade of coal has found favor in India primarily due to likely price advantage but economics of power generation based on such grade of imported coal may be a suspect. This considering that such grades of coal from Indonesia typically have high moisture content, which makes transportation cost per unit of energy generated higher. The quantum of the low grade of coal (<5100 kcal/kg adb) procured from Indonesia is likely to remain relatively low.
However, if the new definition of low grade coal is applied (<5700 kcal/kg adb), it may be reasonable to believe that such a ban may have impact on the Indian power sector as volumes in this grade of coal are expected to rise in the proportion of coal exports to India. Several of the acquisitions made by Indian power generation companies in Indonesia have been in coal blocks that will produce coal of this grade, and a blanket ban on the exports can jeopardize power plant development in India.
On the other hand, the domestic Indonesian market may not be prepared to consume all the coal mined of this grade in view of the power generation capacity addition plans in Indonesia. In such a case, the coal mine development is likely to be deferred. The Indonesian law makers may need to reconsider domestic market demand, investment climate in coal sector and impact of the legislation on the export revenues.
What is the alternative source for Indian power industry if the proposed coal export ban come into effect by 2014?
Indian power generation companies have been forced to look out for coal assets abroad due to the investment and regulatory environment within the country. India boasts of more than 110 billion tonnes of coal reserves, which largely fall within a 300 meters of depth. If the regulatory and investment environment is amended to allow greater participation of private sector Indian dependence on imports will be reduced.
However, for imports, India will continue to look at Indonesia, South Africa, Australia and newer destinations like Mozambique and Columbia. But these sources also have constraints, domestic demands in South Africa is likely to restrict quantum jump in exports out of South Africa. Indonesia has also proposed domestic market obligations. Mozambique may have infrastructure constraints for large volumes of coal being transported from Tete province to ports of Maputo, Ncala or Beira. Australian coal is of high quality but may have higher costs of mining and transport.
What would be the additional cost if Indian consumers switch their sourcing origin from Indonesia?
Indonesia has competitive advantage due to its geographical closeness. However, on a per tonne basis, assuming comparable quality, costs of transport may make marginal difference when compared with South Africa and Mozambique.
When compared to Australian coal, due to the high quality, cost of energy may well be comparable even though shipping costs are higher. Between Indonesian coal (5500 kcal/kg adb priced at USD 90 per tonne) and Australian coal (6500 kcal/kg adb priced at USD 120 per tonne), indicative variable cost difference of power generation may be about Indian Rupees 0.20 to 0.30 per kWh (electricity unit) in favor of Indonesian coal.
Will it affect Indian economy growth or this coal export ban is ignorable as India can easily identify alternative sources of fuel?
The magnitude of growth in power generation in India will necessarily mean that coal will remain the mainstay. Natural gas has had issues of availability. Nuclear plant development is facing socio-political challenge in view of the risks of technology failure. Development of hydel power has also faced issues of land acquisition, rehabilitation & resettlement apart from the technical issues of hydro-geological features. Renewable sources such as solar and wind generation are still projected to constitute a small portion of India power generation mix. Identifying an alternative source that can match coal in its accessibility, availability and affordability in the context of scale of capacity addition required in India is a challenge.
What is the Indian government's role on this issue, whether government has to come out with the solution such as easing Indian mining and environment law, open up mining for foreigners, G2G arrangement, etc…?
There is a need to look at domestic sources with pro-active and constructive approach and make all necessary legal and statutory amendments that make the resources available and mineable. Easing the regulations may not be one of such measures but making those regulations work in sync with each other in a time bound and predictable manner must certainly be.
There is certainly a case for opening the domestic coal sector for private participation, including independent miners, and for foreign participation so that newer technology and enhanced scale of operations are implemented in India. The regulation also needs to permit risk capital to come in for prospecting and exploration.
For imports the G2G relations can be leveraged to secure coal assets. India has good relationship with Indonesia and has also signed a tax treaty with Mozambique in 2010 which will facilitate investments. Government may also engage with these countries to ease exports to India and extend fiscal support to coal mining companies investing in mining and associated infrastructure development.
About Dipesh Dipu
Dipesh Dipu works as Director with Deloitte Touche Tohmatsu India Pvt. Ltd in the Energy and Resources consulting practice of the firm and anchors the Firm’s initiative in the mining and metals sectors.
He is a mining engineering graduate from Indian School of Mines and is a Chartered Financial Analyst (CFA). He has also done executive program in business management from Indian Institute of Management Calcutta. Dipesh has recently been awarded the Abheraj Baldota Gold Medal for the Young Mining Engineer of the Year 2007 by the Mining Engineers’ Association of India in recognition of his contributions in the improvement of mining industry in India.
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Thursday, 13 September 18
SUPRAMAX: INDO-INDIA COAL RUN WAS FIXED CLOSE TO $16000 ON ULTRA - FEARNLEYS
Capesize
Rates took a further drop in the beginning of the week, to later find a floor around mid-week reaching mid USD 7 level for c5 and just ...
Thursday, 13 September 18
SHIPPING IS INCREASINGLY CAUGHT IN THE TRADE WAR LINE OF CROSSFIRE - PETER SAND
Once again, the already long list of tariffed goods has been made even longer. Many more commodities were hit on 23 August, but September is likely ...
Wednesday, 12 September 18
THE INTERRELATIONSHIP BETWEEN LETTERS OF INDEMNITY AND CHARTERPARTY "TIME BAR" PROVISIONS - STANDARD CLUB
KNOWLEDGE TO ELEVATE
Introduction
A recent English Court of Appeal decision provides important guidance on the applicability of charterpar ...
Wednesday, 12 September 18
IS LNG POISED FOR A NEW GROWTH CYCLE? - WOOD MACKENZIE
Gas needs to work for its long-term sustainability. But the mood music is upbeat. Just 18 months ago the LNG market was depressed, anticipating an ...
Wednesday, 12 September 18
U.S. TOTAL COAL EXPORTS TO BE 107 MMST IN 2018 AND 101 MMST IN 2019 - EIA
EIA forecasts U.S. coal production will decline by 1% to 768 million short tons (MMst) in 2018, despite a 10% (10 MMst) increase in coal exports.
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- Directorate General of MIneral and Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- Tata Chemicals Ltd - India
- Kobexindo Tractors - Indoneisa
- Metalloyd Limited - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- McConnell Dowell - Australia
- London Commodity Brokers - England
- Bhoruka Overseas - Indonesia
- Chamber of Mines of South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Indogreen Group - Indonesia
- Meenaskhi Energy Private Limited - India
- Ministry of Mines - Canada
- New Zealand Coal & Carbon
- Singapore Mercantile Exchange
- Mintek Dendrill Indonesia
- GAC Shipping (India) Pvt Ltd
- Leighton Contractors Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Coastal Gujarat Power Limited - India
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- ASAPP Information Group - India
- Manunggal Multi Energi - Indonesia
- Bharathi Cement Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- India Bulls Power Limited - India
- Planning Commission, India
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Marubeni Corporation - India
- Directorate Of Revenue Intelligence - India
- Star Paper Mills Limited - India
- Bayan Resources Tbk. - Indonesia
- Price Waterhouse Coopers - Russia
- Jindal Steel & Power Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Ministry of Finance - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Timah Investasi Mineral - Indoneisa
- Uttam Galva Steels Limited - India
- Central Electricity Authority - India
- Borneo Indobara - Indonesia
- Formosa Plastics Group - Taiwan
- ICICI Bank Limited - India
- Baramulti Group, Indonesia
- Grasim Industreis Ltd - India
- Mercuria Energy - Indonesia
- Meralco Power Generation, Philippines
- European Bulk Services B.V. - Netherlands
- The State Trading Corporation of India Ltd
- Kaltim Prima Coal - Indonesia
- Georgia Ports Authority, United States
- Bangladesh Power Developement Board
- Romanian Commodities Exchange
- Mjunction Services Limited - India
- Antam Resourcindo - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- Commonwealth Bank - Australia
- Sinarmas Energy and Mining - Indonesia
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- Salva Resources Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Indika Energy - Indonesia
- Ambuja Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- The Treasury - Australian Government
- CIMB Investment Bank - Malaysia
- Indo Tambangraya Megah - Indonesia
- Agrawal Coal Company - India
- Binh Thuan Hamico - Vietnam
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Wilmar Investment Holdings
- Dalmia Cement Bharat India
- Parry Sugars Refinery, India
- VISA Power Limited - India
- White Energy Company Limited
- Minerals Council of Australia
- IEA Clean Coal Centre - UK
- Vizag Seaport Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Vedanta Resources Plc - India
- Mercator Lines Limited - India
- Power Finance Corporation Ltd., India
- Alfred C Toepfer International GmbH - Germany
- Bulk Trading Sa - Switzerland
- Attock Cement Pakistan Limited
- Simpson Spence & Young - Indonesia
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- Madhucon Powers Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- SN Aboitiz Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Bukit Makmur.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sical Logistics Limited - India
- Kumho Petrochemical, South Korea
- Gujarat Sidhee Cement - India
- IHS Mccloskey Coal Group - USA
- Bhatia International Limited - India
- Sree Jayajothi Cements Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Anglo American - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement PLC, Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Link Ltd, New Zealand
- Jaiprakash Power Ventures ltd
- Videocon Industries ltd - India
- Cement Manufacturers Association - India
- Sakthi Sugars Limited - India
- PTC India Limited - India
- Economic Council, Georgia
- Orica Australia Pty. Ltd.
- Neyveli Lignite Corporation Ltd, - India
- CNBM International Corporation - China
- Pendopo Energi Batubara - Indonesia
- Aboitiz Power Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- Thiess Contractors Indonesia
- Posco Energy - South Korea
- Aditya Birla Group - India
- Independent Power Producers Association of India
- Sarangani Energy Corporation, Philippines
- Australian Commodity Traders Exchange
- Deloitte Consulting - India
- Edison Trading Spa - Italy
- Altura Mining Limited, Indonesia
- Coal and Oil Company - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
- Energy Development Corp, Philippines
- Intertek Mineral Services - Indonesia
- South Luzon Thermal Energy Corporation
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Riau Bara Harum - Indonesia
- GMR Energy Limited - India
- Renaissance Capital - South Africa
- Therma Luzon, Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Central Java Power - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Indonesian Coal Mining Association
- Barasentosa Lestari - Indonesia
- Electricity Generating Authority of Thailand
- Chettinad Cement Corporation Ltd - India
- Indian Oil Corporation Limited
- Global Business Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Coal Council - USA
- AsiaOL BioFuels Corp., Philippines
- Bhushan Steel Limited - India
- Parliament of New Zealand
- Port Waratah Coal Services - Australia
- Toyota Tsusho Corporation, Japan
- LBH Netherlands Bv - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- Semirara Mining Corp, Philippines
- Coalindo Energy - Indonesia
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- SMG Consultants - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Iligan Light & Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The University of Queensland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Sojitz Corporation - Japan
- Merrill Lynch Commodities Europe
- Xindia Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- Savvy Resources Ltd - HongKong
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- Malabar Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- International Coal Ventures Pvt Ltd - India
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Larsen & Toubro Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Standard Chartered Bank - UAE
- MS Steel International - UAE
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